VINACHEM

Ho Duc Lam, the deputy chairman and general secretary of the Viet Nam Plastics Association (VPA) said nearly half of enterprises involved in the plastics industry (1,000 among 2,000 enterprises) have investment capital under VND 0.5 billion. As a result, they need capital to expand production, trading and import of raw materials. Due to capital shortage, they are unable to invest in modern technology, which make them less competitive with foreign enterprises. The sector is facing to difficulties including the need to import 80-85 percent of raw materials and additives for production. In 2010, enterprises in the plastics industry suffered from increases in material prices, which made their production in an indifferent level. Some enterprises even suffered loss as they cannot increase product's prices.

High interest rates on loans and cumbersome procedures are preventing enterprises from getting loans. Although the pressure on foreign exchange rate is decreasing against earlier months of this year, it has not shown a sign of stability, which creates difficulties for enterprises in setting plans for importing material and selling products.

Although consuming plastic products of local enterprises predominate the local market, the cooperation among enterprises is weak and lacks of specialization. Many of them produce similar products, which creates competition in the local market and reduces the efficiency of production activities.

Solutions

According to Lam, the plan for the development of the plastics sector until 2020 aims to increase the efficiency of enterprises involved in the plastics industry. Accordingly, the active control of local material sources and support for enterprises which make high technological products are two core contents of the plan.

Pham Quang Thang, the deputy general director of Techcombank, announced that the bank would provide capital for its year-long partners, who intend to expand production and have healthy finance and those which have L/C import-export activities. Regarding small and medium sized enterprises which have the investment capital under VND50 billion, if they face to capital shortage, they should directly get access to Techcombank to find solutions. They should let the bank know about their difficulties regarding input and output costs, consumer market, clients or the way that they uses loans so that the bank can find support solutions or provide suitable consultancy.

He added that commercial banks are achieving 20 percent in terms of credit growth. Therefore, enterprises should not take more loans. They should accurately know lines of credit, use loans suitably in accordance with loans’ interest rate and develop feasible and clear plans. They should not take loans from different banks because this will leave negative impression on banks. During transaction period, enterprises should actively liquidate their payment through a bank. To prevent risks, banks often develop a corporate credit rating list. If enterprises can build trust in a bank, they can get loans from a bank which interest rate is lower than other banks.

Le Dang Doanh, the former director of the Central Institute for Economic Management said that the enterprises in the plastics sector should develop "Cluster" groups in order to support each other in producing final products. Domestic enterprises themselves should work together and cooperate with foreign enterprises to develop high competitive and technology plastics products Regarding export market, Leon Chee, the director of Dun&Bradstreet for the Asia-Pacific region, said the plastics sector should target to markets such as EU, the Middle East and Africa because these markets have less strict standards and fewer trade barriers for exports. Chee also promoted the use of IT tools with databases that companies can use to find more customers and suppliers and get D&B Dun code to use in transaction in order to improve reputation in international market./.